If I were the Chinese, I'd demand much better treatment in the US over these shenanigans. The operative principle is "beggars can't be choosers" as the US keeps handing out the begging bowl to China and Co. to get a fix on its debt addiction. There are so many ways China can hurt the US and I don't think the latter fully understands the range of possible consequences for offending the real owners of America as I phrased it in an earlier post which outlines this story in more detail. Then again, few junkies understand the bind they're in and there is no reason to think debt-addled America would know better. This is ridiculous, but don't expect it to go unnoticed in Beijing. Those folks do not take slights very well. From the Financial Times:
Bain Capital and its minority Chinese partner, Huawei Technologies, have shelved their $2.2bn deal to acquire 3Com, a US computer networking company, saying a key Washington committee charged with vetting foreign investments in sensitive sectors had told Bain it would not approve the purchase.
The setback to the deal highlights rising protectionist sentiment in the US as both Democrats and Republicans seek to woo an American electorate suspicious of foreign investment and the effects of globalisation on domestic jobs.
Huawei was set to own 16.5 per cent of 3Com and get board seats, but in an effort to limit possible political objections it was to have no management control.
Bain, a US private equity firm, was prepared to divest 3Com’s Tipping Point unit, which sells security software to the government. But these offers could not overcome opposition by the Committee on Foreign Investment in the US (Cfius), according to people familiar with the matter.
Bain declined to comment. But the news comes as executives at private equity firms worry about what they see as rising US xenophobia and how their deals can become political footballs.
At the same time, Beijing has invoked national security to limit or bar foreign investments in Chinese companies.
The failure to win Cfius approval for the deal is likely to anger officials in China who already believe that Washington has repeatedly proved ready to reject Chinese investment in US companies on spurious national security grounds.
Many regard Cfius as the face of growing US financial protectionism. Jesse Wang, a senior official at China Investment Corp, the sovereign wealth fund, said at a conference in San Francisco last year, that his organisation would not even consider an investment in the US if it seemed headed for Cfius review.
US security concerns scuppered a 2005 bid by Cnooc, China’s third-ranked oil firm, for American oil group Unocal. The latest setback could complicate talks between Beijing and Washington on a bilateral investment treaty.
Huawei, a fast-growing Chinese telecoms equipment manufacturer, had trumpeted its independent status as a private company, in contrast to state-owned Cnooc. But its case was weakened by its corporate secrecy.
Ren Zhengfei, its founder and chief executive, a former People’s Liberation Army major, never gives interviews. Huawei, which is not publicly listed, also refuses to explain its shareholding structure, other than to say that it is fully owned by its employees and that Mr Ren has a stake of about 1 per cent.
In a 2005 report for the US Air Force, the Rand research organisation said Huawei had “deep ties” with the PLA. Huawei strongly disputes such suggestions, saying it has supplied the PLA with equipment but has no “special links” with the Chinese military.